Rumors had been circulating that Dell Inc. ( ) has been planning to launch its first smartphone. Finally, Dell has confirmed this -- the company will launch its first smartphone in the Chinese market. It has selected China Mobile Limited ( ) -- China's biggest cell phone carrier -- to roll out the phone exclusively in China.

The new Dell handset named mini3i is expected to support applications from China Mobile’s online store, Mobile Market, which was launched this week. It supports devices from companies such as Nokia ( ) and Samsung Electronics.

The news was confirmed as Dell showcased its smartphone prototype at the China Mobile event in Beijing. Dell’s representative did not provide specific comments on the launch of the device or its specific operating system. Sources say that the phone has a 3.5-inch touch screen with a 360-by-640 pixel resolution and is based on the Google’s ( ) Android operating system called the Open Mobile System. The mini3i is a 2G phone and does not have WiFi support. The phone will offer music, games and other downloadable content to users.

Although Dell has created a name by selling products at a low price, they often lack user-friendly features and high-end multimedia capabilities desired by consumers. Since this phone is only for the Chinese market, it may spur sales initially, if the price charged is low and affordable. In order to generate higher sales, we believe Dell has to include unique features to set it apart from other large players such as Apple Inc's ( ) iPhone and Research In Motion’s ( ) BlackBerry.

Apple is trying hard to capture the Chinese market with its iPhone, and is in talks with China Unicom ( ) -- the second-largest wireless carrier in China -- about selling the iPhone in the country. Until then, the 2G smartphone from Dell can taste success in China where a 3G network is still being rolled out.

If Apple manages to launch its phone in China, we have our doubts about the success of Dell’s phone in the longer term.